Aggeler v. Nordman Cormany Hair & Compton CA2/6 ( 2015 )

Filed 4/27/15 Aggeler v. Nordman Cormany Hair & Compton CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
MAUREEN McGRATH AGGELER et al., 2d Civil No. B253566
(Super. Ct. No. 56-2013-00440610-
Plaintiffs and Respondents, CU-PN-VTA)
(Ventura County)
v.
NORDMAN CORMANY HAIR &
COMPTON et al.,
Defendants and Appellants.
Defendants Nordman Cormany Hair & Compton, LLP, and Marc Charney
(collectively "NCHC") appeal an order denying their petition to compel arbitration of a
legal malpractice lawsuit. That action was filed by Maureen McGrath Aggeler, Trustee
of the Maureen McGrath Aggeler Trust; Terence McGrath Aggeler; Sheila Aggeler
Barnes; J.D. McGrath Farms, a limited partnership; E.M. Johansing, LLC; Philip H.
McGrath, Trustee of the McGrath Family Bypass Intervivos Trust; and Anne Aggeler
Will, individually and as Trustee of the John J. Will Family Trust (collectively "Park
Owners").
We conclude, among other things, that a 2009 arbitration agreement
between the Park Owners and NCHC applied to legal services NCHC provided to defend
the Park Owners in a 2009 lawsuit. It did not apply retroactively for legal services
NCHC provided for the Park Owners on a contract transaction four years earlier. We
affirm.
FACTS
The Park Owners own real property interests in the Hollywood Beach
Mobilehome Park (HBMP). In 2005, HBMP hired NCHC to draft documents relating to
the sale of lots for a mobilehome park condominium conversion. The conversion
involved subdividing HBMP into "individual lots" and selling them to the residents of the
mobilehome park. The Park Owners said their goal was for the lots to be sold at "the fair
market" value at "the time of the actual sale of the lots." They claim they retained NCHC
to draft contractual provisions to achieve that result.
In 2009, Frank Marler and Sandra Marler filed a class action lawsuit on
behalf of the park's residents against the Park Owners for specific performance, breach of
contract, elder abuse, fraud and other causes of action (the Marler action). They alleged
the Park Owners agreed to sell the individual lots to the residents at prices within a range
of $110,00 to $150,000. The Marlers claimed: 1) there was a "Cooperation Agreement"
(COA) that bound the Park Owners to this price range, and 2) the Park Owners breached
that agreement by raising the prices for those lots. The residents sought specific
performance.
The Park Owners retained NCHC in 2009 to defend them in the Marler
action. The retainer agreement contained an arbitration clause. It provided, "ANY
DISPUTE (OTHER THAN A DISPUTE REGARDING THE PAYMENT OF
ATTORNEY FEES) BETWEEN THE PARTIES HERETO ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ARISING OUT OF OR RELATING TO
PROFESSIONAL SERVICES, SHALL BE RESOLVED BY BINDING
ARBITRATION . . . ."
The trial court bifurcated the issues in the Marler action. In a 2013
"tentative decision on equitable issues," it found the park residents were entitled to
specific performance based on the lower COA lot price range. It said the Park Owners
"breached the agreement by failing to offer the residents the opportunity to purchase their
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lots at prices consistent with the COA." The court rejected the Park Owners' request to
rescind the agreement. It said, "If the owners misunderstood the meaning of the price
term of the COA at the time it was executed, that mistaken understanding was neither
shared by nor known to the plaintiffs." After the issuance of the tentative decision, the
Park Owners settled the action by agreeing to be bound by the lower lot price ranges in
the COA. They claimed they lost money because the COA lot values were significantly
lower than the actual market value of the individual lots.
In August 2013, the Park Owners retained new counsel and filed a legal
malpractice action against NCHC. They alleged that they suffered damage as a result of
NCHC's "negligent conduct in the negotiation and drafting of the COA" in 2005, and that
the loss occurred when the trial court issued its recent tentative decision defining the lot
price range in the Marler action.
NCHC filed a petition to compel arbitration based on the 2009 arbitration
clause. They agreed that the Park Owners' alleged malpractice claims involved NCHC's
"drafting of a contract" in 2005. But they argued the 2009 arbitration clause was broad
enough to cover it because the language was "without limitation to time or matters" to be
arbitrated.
In opposition, the Park Owners said: 1) NCHC did not prepare an
arbitration agreement regarding the 2005 legal services; 2) the Park Owners, as clients of
the law firm, had the right to believe that those earlier services were not subject to an
arbitration provision; 3) the 2009 arbitration clause was intended exclusively for the
defense of the Marler action; and 4) NCHC was improperly using it to attempt to cover
the 2005 services retroactively.
The trial court denied the petition to compel arbitration. It found the 2009
arbitration agreement only involved the 2009 Marler action. It said the arbitration clause
was "prospective in nature and would not apply to representation 4 years prior to its
signing."
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DISCUSSION
The Arbitration Agreement
NCHC contends the 2009 arbitration agreement does not apply to the prior
2005 services they provided to the Park Owners. They claim the trial court erred by
denying their petition to compel arbitration. We disagree.
Arbitration is "an accepted and favored method of resolving disputes . . . ."
(Powers v. Dickson, Carlson & Campillo (1997) 54 Cal.App.4th 1102, 1109.) "'[B]ut
there is no policy compelling persons to accept arbitration of controversies which they
have not agreed to arbitrate . . . .'" (Lawrence v. Walzer & Gabrielson (1989) 207
Cal.App.3d 1501, 1505.)
Arbitration agreements between lawyers and their clients that bar clients
from filing court actions against them are subject to close scrutiny. The lawyer is a
fiduciary representing the client's interests. Consequently, the agreement the attorney
makes with the client must be "'fair, reasonable and fully explained to the client. Such
contracts are strictly construed against the attorney.'" (Severson & Werson v. Bolinger
(1991) 235 Cal.App.3d 1569, 1572, italics added.) "[T]he doctrine of contra proferentem
(construing ambiguous agreements against the drafter) applies with even greater force
when the person who prepared the writing is a lawyer." (Mayhew v. Benninghoff (1997)
53 Cal.App.4th 1365, 1370.) Where a provision contains multiple meanings, the attorney
must explain the consequences of each interpretation to the client. (Reynolds v. Sorosis
Fruit Co. (1901) 133 Cal. 625, 630.) Courts decline to enforce unclear arbitration
provisions where attorneys do not explain the language to their clients and attempt to use
that language against them. (Lawrence v. Walzer & Gabrielson, supra, 207 Cal.App.3d
at p. 1507.)
NCHC contends the language of the 2009 arbitration agreement must be
interpreted to include the 2005 services. The agreement provides, in relevant part, "ANY
DISPUTE (OTHER THAN A DISPUTE REGARDING THE PAYMENT OF
ATTORNEY FEES) BETWEEN THE PARTIES HERETO ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ARISING OUT OF OR RELATING TO
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PROFESSIONAL SERVICES, SHALL BE RESOLVED BY BINDING
ARBITRATION . . . ."
NCHC claims the language "ANY DISPUTE . . . ARISING OUT OF OR
RELATING TO PROFESSIONAL SERVICES" necessarily includes prior services. But
this phrase and the language that immediately precedes it refer to "ANY DISPUTE . . .
BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS
AGREEMENT . . . ." (Italics added.) A client would reasonably believe the phrase
"professional services" refers to the services "relating to this agreement," not a prior
agreement.
NCHC suggests the phrase "professional services" is presumed to be a
comprehensive arbitration clause for all services it ever provided. But California law
does "not permit lawyers to create a presumption of arbitrability through all-purpose
arbitration clauses in engagement agreements with their clients." (Mayhew v.
Benninghoff, supra, 53 Cal.App.4th at p. 1371.) To determine the scope of the arbitration
agreement, we must look to both "'the language used and the circumstances under which
the agreement was made.'" (Powers v. Dickson, Carlson & Campillo, supra, 54
Cal.App.4th at p. 1111.) We consider how a reasonable client would interpret the
provision as well as the reasons why the client sought the professional services. (Ibid.;
Mayhew, at p. 1370.)
In 2009, the Park Owners had been sued and hired NCHC to represent
them. The arbitration clause in the retainer agreement specifically and exclusively
related to NCHC representing them in that action. The first sentence of the agreement
NCHC sent to the Park Owners states, "Thank you for deciding to engage us to assist you
in connection with the above matter." (Italics added.) The "above matter" is specifically
referred to as "Re: Frank Marler . . . v. E.J. Johansing . . . , Superior Court, Ventura
County Case No. 56-2009-003611006-CU-FR-VTA."
The agreement does not mention legal services provided in 2005. The Park
Owners note those prior services were performed by NCHC without an agreement
containing an arbitration clause. NCHC completed those services four years earlier. The
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clients could reasonably rely on that fact in pursuing a malpractice action involving those
services.
Moreover, in the petition to compel arbitration, NCHC acknowledged that
the 2009 agreement is "related to a separate legal matter" from the earlier 2005 contract
services. (Italics added.) Because the agreement was for the defense of the lawsuit filed
in 2009, NCHC considered this to be "a new matter." They advised the Park Owners
that: 1) "California law generally requires that we have a written engagement agreement
for each new matter . . . ," and 2) the "scope of the engagement will be to represent [the
Park Owners] in this matter." (Italics added.) The suggestion that the agreement
involved the prior contract preparation services is refuted by language showing the
litigation aspect of this representation, e.g., "it may be necessary for us to hire expert
witnesses . . . or investigators, and it is agreed that their fees and costs will be billed
directly to you . . . . " (Italics added.) The language NCHC used refutes its claim that the
arbitration clause was intended to apply to any matter other than the defense of the 2009
lawsuit. The Park Owners reasonably relied on the language restricting the scope of the
representation in considering the scope of the arbitration clause.
The 2009 agreement also specifies that NCHC's legal services are to be
performed in the future. It provides that "bills will be sent periodically" for these new
services. This language does not support the claim that the agreement was intended to
cover prior completed services. (Security Watch, Inc. v. Sentinel Systems, Inc. (6th Cir.
1999) 176 F.3d 369, 373 [arbitration provision was not retroactive where the contract
containing the provision was "essentially forward-looking"].)
Where a provision may have more than one meaning, it is "'the duty of the
attorney to inform the client of the fact of its susceptibility of two constructions, and
having pointed out this liability . . . , proceed to know, definitively and clearly, his client's
views, before proceeding further.'" (Reynolds v. Sorosis Fruit Co., supra, 133 Cal. at
p. 630.)
Here there is no advisement that arbitration is required for disputes
regarding the 2005 contract services. Consequently, a client reading this agreement
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would not know that NCHC would apply it to those services. Because of the fiduciary
nature of the relationship, if counsel wanted to apply the arbitration clause to the prior
completed services, "it was [their] responsibility to draft a clear and explicit agreement
to that effect . . . ." (Mayhew v. Benninghoff, supra, 53 Cal.App.4th at p. 1370, italics
added.) The absence of such an agreement supports the Park Owners' position on appeal.
(Ibid.)
The order is affirmed. Costs on appeal are awarded in favor of the
respondents.
NOT TO BE PUBLISHED.
GILBERT, P. J.
We concur:
YEGAN, J.
PERREN, J.
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Rebecca Susan Riley, Judge
Superior Court County of Ventura
______________________________
Lewis Brisbois Bisgaard & Smith, LLP, Roy G. Weatherup, Michael B.
Wilk for Defendants and Appellants.
Foley Bezek Behle & Curtis, LLP, Justin P. Karczag, Thomas Gayle Foley,
Jr., Aaron L. Arndt; T. Todd Thompson for Plaintiffs and Respondents.
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